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CME Group Inc (NASDAQ:CME)
Q4 2019 Earnings Call
Feb 12, 2020, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the CME Group Fourth Quarter and Full Year 2019 Earnings. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. John Peschier. Please go ahead, sir.

John Peschier -- Managing Director of Investor Relations

Good morning, and thank you all for joining us today. I'm going to start with the Safe Harbor language. Then I'll turn it over to Terry and John for brief remarks followed by your questions. Other members of our management team will also participate in the Q&A session. Statements made on this call and in the other reference documents on our website that are not historical facts are forward-looking statements. These statements are not guarantees of future performance. They involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what was expressed or implied in any statements. More detailed information about factors that may affect our performance can be found in our filings with the SEC which are on our website. Lastly, on the final page of the earnings release, you will see a reconciliation between GAAP and non-GAAP measures.

With that, I would like to turn the call over to Terry.

Terrence A. Duffy -- Chairman and Chief Executive Officer

Thank you. And thank you, John. Thank you all for joining us this morning. Our comments will be brief, so we can get right to your questions. We released our executive summary this morning, which provided extensive details on 2019 and the fourth quarter. Fourth quarter ADV ended slowly with 16.9 million contracts, down from an extremely active Q4 2018 period.

We are very pleased with the work we did to integrate the NEX business during 2019, including back office migrations to support Finance and HR systems, and the building of an integrated global sales team. Importantly, our Globex technology migration is on track for BrokerTec and for EBS.

During 2019, we had 40 trading days over 25 million contracts, that is up from 35 days, the prior year. We had annual volume records in interest rates, metals and total options. We continued to position CME Group for the long term by launching innovative new products, tools and services to support customer needs, and to create capital and operational efficiencies for market participants.

We drove significant growth from customers based outside the United States during 2019. During the year, non-US trading volume grew 10% to almost 5 million contracts per day. During Q4, non-US ADV expanded from 24% of the total volume to 27%, and the proportion increased year-over-year across all six product lines. So far in Q1, our business from outside the United States is up double digits in all six asset classes.

We continued to deliver successful new product rollouts during 2019. Our popular Micro E-mini ADV traded approximately 106 million contracts since its launch in May, with diverse participation from across [Phonetic] segment and regional perspective. We gained traction in innovative products including SOFR futures and CME FX Link which just set a daily trading record in early January of this year. Also, we are very pleased to have launched E-mini S&P ESG futures as well as our new Bitcoin options product.

So far in Q1, our markets have been fairly active with total volume up more than 10%. It's worth noting that activity in our higher rate per contract commodity contracts is particularly strong with metals up more than 50%, energy up 20%, and agricultural products up more than 10%. Total open interest has increased from 113 million at year end to more than 128 million contracts.

I look forward to answering any questions you have, but before I do that, I will turn the call over to John to provide some additional comments. John?

John W. Pietrowicz -- Chief Financial Officer

Thanks, Terry. We made a lot of progress during 2019 as we integrated NEX, attracted new customers and created innovative solutions. We delivered $4.9 billion in revenue and managed our expenses very carefully which ultimately drove $6.80 in adjusted EPS. These strong results led to an annual variable dividend of $2.50 per share and we recently announced our regular dividend of $0.85 per share, a 13% increase from last year.

In the fourth quarter, we faced tough comparables to a very strong Q4 of 2018. Despite the headwinds, we continued to manage the business very well. Expenses were virtually flat with the previous quarter and we delivered $1.52 in adjusted EPS. One thing to note for the quarter, as you know, our business experiences mix shifts in product, venue and membership class. In December, we experienced an unfavorable mix shift with a higher proportion of member trading and a lower proportion of privately negotiated trades in our rates business which reduced its rolling three month RPC for the month of December. None the less, the rates RPC was up sequentially for the quarter and up year-over-year.

Moving to 2020, we will continue to execute on our strategy, integrate the businesses and migrate customers from the legacy BrokerTec system to Globex. In terms of our guidance for this year, I want to provide some background. We started 2019 with initial adjusted expense guidance of $1.65 billion to $1.66 billion. For the full year we were $13 million below the low end of that range at $1.637 billion. For 2020, we currently expect full year adjusted operating expenses, excluding license fees, to be between $1.64 billion and $1.65 billion.

For capital expenditures, excluding one-time integration costs and net of leasehold improvement allowances, we expect to be in the range of $180 million to $200 million. By the end of 2019, we targeted $50 million in run rate expense synergies and at the end -- at year end we exceeded that target and achieved $58 million in run rate expense synergies plus another $6 million of subleasing revenue for a total of $64 million. This is net of the additional costs that we are carrying to run infrastructures in parallel as we prepare for the migration to Globex for BrokerTec and EBS. At this time, we expect to be at $110 million of annual run rate expense synergies by the end of 2020.

In terms of our tax rate, last year we guided to an effective tax rate of between 24.5% and 25.5%. I mentioned in Q3 that the new US tax legislation would have a positive impact going forward. As a result, we expect our 2020 adjusted effective tax rate to be between 23% and 24%. Please refer to the last page of our Executive Commentary for additional financial highlights and details.

With that short summary, we'd like to open up the call for your questions. [Operator Instructions] Thank you.

Questions and Answers:

Operator

Thank you. [Operator Instructions] And our first question today, we'll hear from Rich Repetto with Piper Sandler.

Rich Repetto -- Piper Sandler -- Analyst

Yeah. Good morning, guys. At first, I just want to shout out to Bryan Durkin. I know, nearly 40 years in the exchange space. Sorry to see him go. He was truly an exchange guy. So with that, I guess my question is, John, is around the cost and the synergies. And could you tell us, we ended up in what you actually realized in 2019. And then I'm just trying to get a feel for what the underlying growth rate is, ex the synergies that you've got. It looks like it's going to be just slightly up on a net basis, but what -- how does the synergies impact? What you've realized so far? What will you realize next year?

John W. Pietrowicz -- Chief Financial Officer

Yeah. Great, thanks. Thanks, Rich. I appreciate the question. So in terms of our realized expense synergies, we realized about $35 million in 2019, in terms of synergies. Like I mentioned in the prepared remarks, we exceeded our run rate synergy target. We had originally targeted $50 million, we hit $58 million in expenses, plus an additional $6 million in leasehold or sublease revenue. So about $64 million all in. So really pleased with the performance in terms of the integration and synergy realization. This is a total company effort, and I think we did an excellent job.

So in terms of next year, the way to think about it is, if you take our expenses for this year excluding license fees of about $1.637 billion, you add that in the realized synergies, when you grow that expense base between 2.5% and 3%, that's about the upward pressure that we get in our expenses. Then you back out the run rate synergies that we had which is about $58 million, and then you back out, what we think we're going to realize in 2020 and that's about $15 million in realized synergies in 2020. Now, it's less than what we achieved in -- from a realized perspective, less than we achieved in 2019. And that's because as you know we are going to be migrating customers onto Globex in the fourth quarter. So that's really kind of the target for us and that gets you basically flat with this year, about $1.640 billion to $1.650 billion. So that's kind of the way to think about it. We are going to accelerate the synergies in 2020 as much as we can. We're very comfortable with our target of $110 million. But if we can accelerate the synergies, we will, but the Company is really focused on making sure that we have a good and seamless transition from the legacy BrokerTec platform to Globex.

Rich Repetto -- Piper Sandler -- Analyst

Thank you for that.

Terrence A. Duffy -- Chairman and Chief Executive Officer

And Rich, let me just thank -- let me just thank you for making the nice comments about, all of our dear friend, Mr. Durkin who is here.

Rich Repetto -- Piper Sandler -- Analyst

[Indecipherable] Thank you. That helps a lot, John. Thank you.

John W. Pietrowicz -- Chief Financial Officer

Thanks, Rich.

Terrence A. Duffy -- Chairman and Chief Executive Officer

Thanks, Rich.

Operator

And move on -- we'll move on to Dan Fannon with Jefferies.

Dan Fannon -- Jefferies -- Analyst

Hi. Thanks. Good morning. Can you talk about the NEX integration a little bit more, and specifically the migration over to Globex in 4Q. I think in the prepared statement you talked about some of the client forms you've been holding, maybe what you're hearing from clients and as we think about that migration, what if any kind of uptick in volume might we -- might you anticipate?

Terrence A. Duffy -- Chairman and Chief Executive Officer

Bryan?

Bryan T. Durkin -- President

Sure. Thank you. With respect to the integration, I think I've alluded to the last call that we complete our API releases which makes it possible for our customers to begin mock trading in the test environment. We are pleased with the outreach to the clients to date in terms of their sign-up for connectivity and for testing. We've had multiple forums both domestically and internationally with our client base to get them situated and ready for testing. I think the rubber will really meet the road in the course of the next quarter in terms of the acceleration and making sure that we've got the clients in actively testing throughout Q2.

We're excited about the capabilities and the functionality attributes. Moving over to Globex, the feedback that we continue to hear from the client base is very positive in terms of the switch-over. So that in conjunction with the talks that we're having with clients in prep for EBS as well. The clients feel like we're doing a very methodical job in terms of our outreach, in terms of the preparation, and in terms of the planning and testing. I think I've mentioned in the past, we have a fairly elaborate testing program in the context of ensuring that our clients have the ample time to acquaint themselves with the functionality in the platform switch-over. But many of our clients, by the way, are very familiar with Globex.

Dan Fannon -- Jefferies -- Analyst

Great. Thank you.

Terrence A. Duffy -- Chairman and Chief Executive Officer

Thanks, Dan.

Bryan T. Durkin -- President

Thanks, Dan.

Operator

Next, move on to Brian Bedell with Deutsche Bank.

Brian Bedell -- Deutsche Bank -- Analyst

Great. Thanks. Good morning, folks.

Terrence A. Duffy -- Chairman and Chief Executive Officer

Good morning, Brian.

Brian Bedell -- Deutsche Bank -- Analyst

Good morning. Can you just talk about maybe some potential -- the potential for RPC to move up a little bit in 2020 here? Maybe if John, you can talk about the impact of the adverse member mix shift in rates on fourth quarter? And then any planned pricing changes across the futures product suite in 2020? And also for the market data in your last time I think you had a price increase on the monthly fees in 2018. Sometimes you do that every other year, so just thinking if there's anything planned for 2020. And then I also just squeeze in just the non-US has been growing nicely, any commentary on the potential impact from the shift outside the US in that mix shift?

John W. Pietrowicz -- Chief Financial Officer

Okay, Brian. That was quite a number of questions. So I'll do my best to hit them all. So first off, let's talk about our RPC. So, in the month of November, we talked a little bit about it. I'm sorry, we talked a little bit about in my prepared remarks, and so basically what happened in the month of December, the rolling three months average for rates, for the RPC was actually down compared to the rolling three months average in November. So really to understand why it went down, you really need to look at the activity that was occurring in December, which rolls into the calculation and September, which rolls out of the calculation. So when you isolate those two months of activity, in September, we had a higher amount of member trading activity, plus a higher proportion of privately negotiated trades and that really costs -- those are higher RPC trading. So that caused the RPC to actually decline rolling three month November compared to rolling three month December, and it's really a change in mix between September and December.

So that was what happened on the rate side. In terms of 2020 and things that are impacting or could impact our rates, a couple of things to point out. Number one, if you take a look at our trading activity so far this year, and I'm very pleased with our volume being up 11% year-to-date. And what's interesting when you look at the mix of trading, we see energy up 20%, we see ag is up 11%, we see metals up 51%. All of them in the commodities area which have a higher RPC, than the financials. We also see very good strong energy -- equity trading as well. Also, when you take a look at how we're performing overseas, EMEA is up 25% with all prior periods up double digits so far this year and then APAC is up about 34%. So very strong activity coming from international as you know. International tends to have a higher RPC than US.

So when you look at the mix of commodity, strong commodities performance and strong international performance that should help in terms of the RPC. Then you had a question around pricing. In general, we are always looking at our pricing schedules and -- we take a look at everything that hits -- impacts our RPC, so we'll look at the face rate, look at the market maker programs and we look at incentive plans. And we do a very detailed product by product analysis, we take into consideration the market environment, the total cost trade and other factors. And when we do -- and we do -- when we look at making any pricing adjustment, we do it with an eye toward not impacting volume, that's very critical.

In 2019, we didn't take any significant pricing actions. In 2020, we did make some adjustments that impact the RPCs and assuming similar trading activities in 2019, the impact would be in the range of past adjustments in the range of about 1.5% to 2% of our futures and options transaction fees and majority of the changes begin at the start of February. So that was in response to your question on the pricing. And then our market data, we've made some pricing adjustments in non-display data recently that went into effect and then I think that's kind of the major point on our market data. So I think that addressed all your questions.

Brian Bedell -- Deutsche Bank -- Analyst

Yes. That's great. Just maybe what's the impact of the market data price increases from a revenue perspective.

John W. Pietrowicz -- Chief Financial Officer

We didn't provide -- we didn't provide that on the market data.

Brian Bedell -- Deutsche Bank -- Analyst

Okay. All right. Fair enough. Thank you so much.

John W. Pietrowicz -- Chief Financial Officer

Thanks, Brian.

Operator

And next we'll move to Mike Carrier with Bank of America.

Mike Carrier -- Bank of America Merrill Lynch -- Analyst

Good morning, and thanks for taking the question. Just in terms of the growth outlook, you guys highlighted the strength in ADV and we've seen that coming from outside the US and then even the new products, I think you guys mentioned that over the past decade, contributing about 10% of ADV today. So I guess just on the international front, it looks like some of the products are contributing 25% today and some are in the 40s, maybe where do you see that opportunity ahead given either penetration, potential or some of the initiatives that you have in place. And similar unlike the new product launches, can you provide some color or some context around maybe the pace of new launches or even the uptake that you're seeing over the past few years versus the past decade that drove that 10% contribution to ADV today?

Terrence A. Duffy -- Chairman and Chief Executive Officer

Mike, it's Terry Duffy. We're going to -- kind of go around the table a little bit here. So I think there's a lot to that question, a lot of us could touch on it, but I'm going to ask Sean to touch a little bit as it relates to some of the launches that I referenced earlier, one being, obviously SOFR is not a brand new launch, but it's out there and it's growing, so I think that is something that we can have a conversation about and then obviously it lifted the ESG futures, which are new. So it's kind of hard to get a trajectory of how they're going to perform in such a early stage, and but Sean, I will turn it to you on some of the new products and we can talk about the international growth.

Sean Tully -- Senior Managing Director and Global Head of Financial and OTC Products

We're constantly focused on about adjusting our existing products in order to make them more attractive to participants, especially related to alternative products and listing new innovative products addressing the needs in the marketplace. So far we're very excited about where we are there. We're currently running over 40,000 contracts a day. We have the equivalent of more than $1.2 trillion worth of open interest. Obviously silver, a large and important initiative in addition to the futures side that I just talked about. We've now cleared more than $54 billion worth of SOFR interest rate swaps across 30 counterparties. On future side, we now have well over 350 different firms trading our silver futures, so very excited about those developments.

But if you look at each and every asset class. In the financials, what we noted was in our report, we said that we had more than 2.1 million ADV last year from new products launched since 2010. We had $310 million in revenues. This is across every asset class. We are continuously innovating. So if you get equities, for example, over the last few years, we launched the BTIC, Basis Trade at Index Close, which has got a very high RPC and enjoying a very good growth and significantly adds to our revenues.

In addition to that we have the total return in futures. We have the dividend futures. And then obviously, you know very well about the Micro E-mini, maybe just a brief update on the Micro E-minis. We are doing 647,000 contracts a day so far this year. That's up 37% from last year. In addition to that, we did tell you last year when we started in terms of the RPC, when we initially launched our product, we typically have heavy incentives to make sure that there is very high liquidity on day one, so that everyone always has a good experience from day one. But we also promised you that we would be reducing those incentives over time.

So if you, if the Q3 RPC for example on those Micro E-minis, it was $0.078, if you look at in Q4 that was $0.114. So a very significant increase in that RPC, while the product is growing very significantly. If you look then at the RPC on that Micro E-minis, there's more than 80,000 different what we call Tag50s, that are trading then, so a huge number of clients, we believe we penetrated tens of thousands of new clients, in particular, larger retail traders, but the other thing I want to get to is, is just the enormous growth in the product, growth in the RPC. Sorry, the last thing I want to say is a very high premium relative to the E-minis. So if you do the math as you'll recall, the micros are one-tenth the size of an E-mini. That means risk equivalent, that's a $1.10 a contract, though this too [Phonetic], you can see we reported in our equity index is $0.65 a contract as our average RPC.

If you look, then we mentioned in the prepared remarks, FX Link, a new record day in January. In addition to that, the other big thing I would mention in foreign exchange, in terms of innovations or adjusting the existing products, of late last year, we adjusted the minimum price increments, this sounds technical, but it's actually very important. Adjusted the minimum price increments in the quarterly rolls in dollar-euro, dollar-yen and dollar-sterling. Those December rolls were outstanding. I think it's fair to say for each of those three products. So in each and every case, the roll volume was up tremendously, the percentage of the open interest that was rolled was up tremendously.

And we saw a huge increase in interest from banks and from hedge funds. We did announce earlier this year that we are now going to likewise be reducing the minimum pricing increments in dollar-Canada and Aussie dollar. In addition to that, what impact does that have on our foreign exchange market? Foreign exchange market volatility is incredibly low. If you look at the January volatility, it is the lowest volatility going back to 1992 for the G7 currencies. So incredibly low volatility. Nonetheless, last year the number of large open interest holders in our foreign exchange business grew by 30%.

On January 28th, we had a new all-time record high in large open interest holders and foreign exchange. So, we believe these adjustments to our products even in this very low volatility environment is having a very positive impact. So every asset class is seeing new innovation, new product launches. I keep mentioning them, one last one, I'll mention is we just launched in January also, options on our SOFR futures. I could go on and on, but hopefully that gives you enough color.

Terrence A. Duffy -- Chairman and Chief Executive Officer

Yeah, Mike, let me just talk real quick about Asia and Europe, and I'll ask Bryan to comment a little bit about the growth throughout Europe, because I think that was the second part of your question. And I'll touch just a quick story about Asia. Last night, Julie Winkler, who is my Chief Commercial Officer held an offsite, which she was scheduled to be with her entire team in Asia, but obviously that was not going to be the case. So they held it here from Chicago. And we have over 200 salespeople today, we have a significant amount of those in Asia. We -- I actually participated in her presentation because I happened to be walking by, so I did participate throughout the first hour, and it's quite fascinating to see the enthusiasm among the Asian sales folks because of -- we are now able to leverage our BrokerTec next to a treasury platform.

We hear things that sales folks never had before that can hopefully increase the business throughout the region of Asia. We're having great growth through there. So we referenced it in our earlier numbers, and we're excited about the prospects of what the sales force can do by creating capital and operational efficiencies with their next transaction as they continue to sell those products throughout the region. And I'll let Bryan talk about Europe.

Bryan T. Durkin -- President

It's been a journey. You walked along with us over the last few years. You heard what we've done to build up to the ability to say that we have about 5 million of our volume now coming out of international. You're well aware of the liquidity programs we put in place over the years to build up that activity during the regional time zone. And I think that that story is just continuing to unfold in a very positive way based on the diversity of the product, the asset classes that we represent, our global sales force that is very dedicated and attuned to the very specific client segments that do business at our institution. Over the past five years, we've seen over 75% growth in our average daily volume internationally. And what that breaks down to is about 4 million contract coming out of the EMEA region and around another million contract coming out of Asia.

This is the first year that we were able to, on an average daily volume for the year, really meet and in some instances exceed that $1 million -- 1 million contract level. You had mentioned that you had seen double-digit growth occurring in various asset classes. Again, it's the beauty of the diversity of our products, so earlier quarters, you were seeing tremendous growth in the international side in Europe on the interest rate products. This last quarter we saw a little bit of a slide in terms of interest rates in the European side of the equation, but that was offset by strong growth in terms of our commodities, particularly our gold futures, our platinum futures, our foreign currencies did well. With respect to Asia Pacific, we saw a bit of a downturn in our energy products, but that was highly offset by performance in our interest rate quadrant in our equity.

So again it's the diversity of the products that we have. It's our ability to penetrate these client segments. You've heard me talk about country planning, which is a rather new phenomena that we've introduced across our sales force and our international team over the course of the last two years. We're covering over 70%, I think, at the top 10 countries that are providing the revenues on the international time zone, where we have very, very specific deliverables for our sales force and our business lines and our international teams, and we track those accordingly.

John W. Pietrowicz -- Chief Financial Officer

Yeah. Just one last point. If we maintain this level of volume from international, this will be the largest month in our history since 2012, since we started tracking it. This will be our largest ADV month, in the month of February.

Terrence A. Duffy -- Chairman and Chief Executive Officer

Hopefully that gave you a little color, Mike.

Mike Carrier -- Bank of America Merrill Lynch -- Analyst

Yeah. Thanks a lot.

Terrence A. Duffy -- Chairman and Chief Executive Officer

Thank you.

John W. Pietrowicz -- Chief Financial Officer

Thanks.

Operator

And next we'll move to Alex Blostein with Goldman Sachs.

Sheriq Sumar -- Goldman Sachs -- Analyst

Hi, this is Sheriq filling in for Alex. Can you talk about the transition to SOFR? And what sort of preparation have you made? And how should we think about the implications on volumes and the pricing for this product?

Terrence A. Duffy -- Chairman and Chief Executive Officer

Go ahead, Sean.

Sean Tully -- Senior Managing Director and Global Head of Financial and OTC Products

Sure. We have been a member of the alternative reference rate committee now for several years, and we were the leader in terms of introducing the SOFR futures. Already mentioned earlier that we have about $1.2 trillion worth of open interest, we do now have 40,000 contracts a day. If you look recently in terms of our SOFR futures, we are running 78% of the global volume in SOFR futures in terms of average daily volume, and we're right at 94% of the open interest.

So that's a very solid growth in terms of those products. We see this as additive to the rest of our products in terms of the Fed funds futures and the Eurodollar futures and as well as treasury futures obviously, there is net of product that we expect to grow side by side with our existing products. In addition to that, I mentioned earlier on interest rate swap side we cleared $64 [Phonetic] billion worth of interest rate swaps. We have 30 participants now who cleared interest rate swaps with us. And working very closely with the industry on developments. I did mentioned also earlier that we did launch SOFR options on our server futures in January.

Other things going on this year, later this year we will be working with the industry, we will be changing the discounting on our interest rate swaps from Fed funds over to SOFR. So I would say that there is a continuous increase in the adoption of SOFR-buyer clients and a very goodly now ecosystem in terms of trading the SOFR futures. As I said earlier, it's actually, I think more than 370 participants, have been trading the product. So I think it's a very healthy. It's a very healthy product area and it's growing very nicely.

Sheriq Sumar -- Goldman Sachs -- Analyst

Thank you. And anything on the pricing side, as to how that would impact long term.

John W. Pietrowicz -- Chief Financial Officer

On the pricing side, resume in the beginning when we -- when we launched new products, we want to ensure that they are extremely liquid. So in the beginning, we typically offer incentives in order to ensure that we have the liquidity. And with SOFR, I've said this on previous calls, I think we're the natural home for the product. So we offer the most efficient place to trade, the French economy spreads between Eurodollar futures and the SOFR futures, the Fed funds futures and SOFR futures.

In addition to that, from a margin and capital perspective, we offer offsets between the SOFR futures, Eurodollar futures, SOFR futures, treasury futures, SOFR futures versus Fed fund futures, so an extremely efficient place to trade. In the beginning, we do have incentives. We do have incentives today. And as I said we have 94% of the global open interest in the product. Over time, I would expect us to reduce those incentives. And I expect the pricing to look similar even at some point to our Eurodollar futures. But at the moment, honestly, there are some incentives.

Sheriq Sumar -- Goldman Sachs -- Analyst

Okay. Thank you.

Operator

We'll move onto Alex Kramm with UBS.

Alex Kramm -- UBS -- Analyst

Hey, good morning, everyone. Wanted to take some of the pricing questions that you've got. And then maybe take them over to the NEX side. Can you talk about, how you view pricing in those legacy business a little bit more. One, on the non-transaction side, but also on the transaction side, I think there's still a lot of legacy contracts that are fairly fixed. So do you think there will be opportunities as maybe some of that comes up, as you maybe, move to Globex to maybe restructure some of that or are you pretty happy to kind of keep the volume there, no matter what the -- and maybe not participate in the upside as maybe competition gets a little bit bigger in that space. Thank you.

John W. Pietrowicz -- Chief Financial Officer

Hi, Alex, this is John. I'll start and Sean can chime in. You know, you're correct. When you look at the NEX, the legacy NEX businesses, BrokerTec in particular has a large number of bespoke agreements. And they tend to very less with volume than our futures business. When you look at EBS, it's more akin to our futures business in terms of volume activity versus revenue realization. So that's on the market side. On the optimization business, the non-transaction optimization business is much more of a subscription-based or monthly based fee for those services, obviously on the transaction side of the optimization businesses that varies a bit with the amount of activity that's performed.

So for example, this quarter we saw a sequential increase in the amount of revenue generated from the transaction business of the optimization on our companies that we own, it was actually up about $4 million, sequentially. That was primarily because there was more activity at triReduce. In terms of our -- we haven't announced any long term plans around pricing. We're very focused on the transition from the legacy NEX platforms on to Globex. But as we always do, we're always looking at our pricing and we want to make sure that we're very -- got a very compelling offering that we've got a very compelling platform for our customers to use.

Sean Tully -- Senior Managing Director and Global Head of Financial and OTC Products

Yeah. I think -- I think, underlying what John said, this is Sean. Our primary focus now is transitioning the businesses on to Globex. So both BrokerTec this year and EBS next year on to Globex. And secondly, making sure that we have single-most attractive platform for anyone to trade in terms of our products. So creating new [Indecipherable] between the cash and the futures markets that have existed before, because we have both as a product. So we are really focusing on the transition on to Globex, one. Two, making sure we have the single-most attractive products possible. Three, creating new efficiencies that the marketplace has never seen before, and four, cross-selling -- so the cross-selling is the thing that we've already -- we have already heavily into.

In terms of that cross-selling, maybe just a couple of points. In particular, we started out -- we started tracking what we call cross referrals and cross introductions, between the cash and futures businesses. And to-date, we are now tracking more than 400 cross introductions where we are having the cash markets, salespeople introduce clients to our futures, folks, as well as our futures sales team introducing clients over into the cash markets businesses. The large portion of those are -- as we had expected and as we talked about when we launched the transaction and the highest portion is coming from foreign exchange customers in the cash markets as always the futures markets, looking at the cross-sell opportunity, particularly in Europe. The number two category is in interest rates. So we're really very focused on the client experience.

Alex Kramm -- UBS -- Analyst

Very helpful. Thank you.

Operator

And we'll move on to Chris Harris with Wells Fargo.

Chris Harris -- Wells Fargo -- Analyst

Thanks. Hi, guys.

Terrence A. Duffy -- Chairman and Chief Executive Officer

Hi, Chris.

Chris Harris -- Wells Fargo -- Analyst

With the news out there regarding prices interest in eBay, can you give us an update on your thoughts regarding M&A and specifically hoping you could address whether you consider somewhat out of the box transactions?

Terrence A. Duffy -- Chairman and Chief Executive Officer

Well, we won't comment on what was just talked about wit [Phonetic] Intercontinental. As far as our M&A strategy, Chris, as you've seen, we're very deliberate and diligent in how we approach it. And we try to be obviously opportunistic, if something arises, that we think is right for good value of the shareholders, again increase the value for the clients. So we have a long history and I'm not going to go through all the history of what our integration or our transactions have been. We're focused on the NEX integration, we have two years left on that integration process to get both BrokerTec and EBS on the platform. It's a big part of what we're trying to accomplish. So that's our strategy for now. And obviously, we always look at things, but at the same time, we are focused -- laser focused, as I've said before and complete the integration of this transaction.

Chris Harris -- Wells Fargo -- Analyst

Okay. Got it.

Operator

And next we'll move to Kyle Voigt with KBW.

Kyle Voigt -- KBW -- Analyst

Hi. Good morning. Maybe a couple of questions on market data. It looks like the NEX market data revenues were down $5 million sequentially. Anything to call out there that drove the decline, I suppose that implies there was some good sequential growth in CME's core data revenue, just what drove that without the pricing move. And then maybe if you can just give an update on the derived data initiative and the kind of sales progress there.

John W. Pietrowicz -- Chief Financial Officer

All right. Hi, Kyle. This is John. When you take a look at our market data line, from a revenue perspective, it was actually up about $500,000 sequentially from Q3 to Q4 and really when you peel it back, our market data performed very well in the fourth quarter. In Q3, we had $1.1 million more in audit findings. And as you know, those audit findings can vary quarter-to-quarter depending on as those audit findings get realized. So really if you strip out the audit findings, our market data is actually up $1.5 million, and that's really a function of two things. One, we had a pricing change that we discussed in our non-display data. It also, we've seen a stabilization on the attrition which has been helpful. So the core market data excluding audits is up about $1.5 million. And from a NEX perspective, the market data is relatively flat, Q3 to Q4. Bryan, you want to talk a little bit about them.

Bryan T. Durkin -- President

I mean, you covered the pricing, but on the derive side of it, we continue to be very pleased with the demand from the client base in terms of having access to our products for them to be able to build structured products based on our data. That business continues to grow and evolve and the interest in -- the demand is coming from a variety of different client sectors. What I'm most pleased about is our engagement with the consumers of this data, whether it be our core customers -- customers being the consumers of the data for trading. So you got to think about this outside the box of subscribers, the traditional subscribers, but those looking at it from the perspective of using data to complement both their trading, development of products that they can sell in-house, as well as demand for historical data that they used for a variety of reasons.

And so we've really been trying to more deeply engage with the client base. The audits quite honestly that we started almost a couple of, I think, it was couple of years back, in earnest, has really allowed us to capture a much deeper insight into how the variety of client segments utilize our data. That's brought us much closer to the client base itself and the consumers.

The other thing that we look very closely at is the distributors of the data. So really drawing a much closer alliance in relationships with the vendors and how we go about pricing that information for them to be able to redistribute our data. So we're very excited about the foundation and the programs that we put in place over the last couple of years to help us really grow each of these variety of data offering. When you look at NEX, as you can appreciate, we have to get into this more deeply this past year in terms of looking at the -- maybe the esoteric nature of how that data is utilized by EBS as well as BrokerTec. And so we have a number of plans on the horizon working closely with Sean and his team in terms of how we can better structure and package that information for consumption.

Kyle Voigt -- KBW -- Analyst

Thanks. And John, I apologize, the $5 million sequential decline looking at was actually for the NEX other revenue, could you just help just provide any clarity on that? I'm sorry.

John W. Pietrowicz -- Chief Financial Officer

No worries. No worries, Kyle. Yeah. So really the primary driver of the $5 million reduction in the other revenue is as we call in the third quarter, we announced that we had completed the sale of the ENSO business, so the majority of the $5 million decline was related to that sale.

Kyle Voigt -- KBW -- Analyst

Got it. Thank you.

John W. Pietrowicz -- Chief Financial Officer

All right. No problem.

Operator

And we'll move on to Owen Lau with Oppenheimer.

Owen Lau -- Oppenheimer -- Analyst

Good morning and thank you for taking my questions. So I want to touch on the commodities and metals a little bit up. So the ADV and open interest of commodities and metals were up quite nicely year-over-year at the end of January. Could you please talk about some of the drivers of the strength there? So are you taking shares from other exchanges internationally? Is that continued migration from cash to derivatives? Or is it mainly driven by like volatility events like coronavirus? How should we think about the contribution of each driver and the sustainability of the strength for the rest of this year? Thank you.

Terrence A. Duffy -- Chairman and Chief Executive Officer

Thanks. I'll give that to Derek.

Derek Sammann -- Senior Managing Director and Global Head of Commodities & Options Products

Excellent. Yeah. It's been a -- it's a good run, it's actually -- there are three different businesses that some are operating in conjunction with other, some are actually quite correlated when you look at the impact of coronavirus, African swine fever and the Phase 1 trade deal that we've seen unleashing. As Bryan had mentioned, we've seen particular strength in the commodities businesses, all three of these, most especially, our metals business out of Europe and Asia. I think that's a business that over the last four or five years not only have we positioned our COMEX Gold and silver contracts as the global benchmarks, we are seeing that as more business shifts out of the bilateral swaps market, primarily the London physical market, the bullion market into all markets. We actually regressed our volumes back 20 years. And if you go back over 20 years ago, COMEX represented 10% of the total physical and cash combined business as futures and cash. Fast forward to today, and COMEX now represents 50% larger volumes than what we've seen in LBMA business. So we're seeing that bullion market adopt very much of the capital and operational efficiencies of COMEX gold.

So we've gone from one-tenth of that physical market to 50% bigger than that cash market. So the significant growth in uptake is largely driven by US and actually Asian and European customers. We see that on the competitive numbers, we see that in global numbers. But does this refer to -- so far this year we're up 50%. We see that our Asian business and metals is up 56%. It's up 58% as well in APAC. So to the extent that business continues to grow, that is both metal and particularly gold as a preferred commodity in -- on certain markets in which we operate. And I think, better positioning, the futures market is the best solution and product for delivery of that market.

Flipping over to our energy business, I think it was referenced earlier in the call, Terry talked about the strong growth we've seen so far this year in our energy business. Globally energy business is up 20%, and we're seeing that actually up significantly in Europe as well. And what we're seeing there is after a year of basically a $10 trade in engine oil and natural gas sitting at around $2.5. We've seen significant impact to concerns of global growth in two ways in which the market expressed the view on concerns of global growth is effectively the price of oil. So we've seen that downdraft has actually taken place.

We saw WTI go from 62 to 52 [Phonetic] in the span of two weeks on growth concerns. We've seen our business so far this year absolutely take off. So not surprising to see that the preference for global crude trading taking the place in the form of WTI. It's a global crude oil market story that we've been talking about for the last three years, and we see that play very much intact.

And I'd say even more strongly in natural gas, our business in natural gas is up 40% so far this year, and our market share has gone to an all-time record 84% of natural gas futures, Henry Hub in the US. So again, when you're seeing markets break out the low levels driven by growth rate concerns globally -- there's an article that just came out 20 minutes ago on global growth concerns, putting downward pressure on energy prices, the market is coming to CME to use our energy prices to manage that risk.

Lastly, on the ag side. This is a business that's close to a $0.5 billion business to the firm. This is a market where we saw record dairy and livestock volumes last year. So as we saw concerns about African swine flu, in Asia, the concerns are common occurrence. We saw that risk being managed here at CME Group, most particularly with the Phase 1 trade agreement now announced, we've seen a resumption of our volume. Went a little bit sideways in grains and oilseeds last year, we're seeing our ag business up so far 11% this year. And most notably when you see where that growth is taking place, we're seeing the business so far up 33% in Europe and up 51% in Asia.

So again, when the market experiences volatility, uncertainty and breakout ranges, you're seeing the market continue to adopt CME Group global benchmarks. And we're seeing that, not just for US time zone, but the point Bryan was making and Terry referenced earlier, an outsized proportion of new client acquisition in Europe and Asia.

Owen Lau -- Oppenheimer -- Analyst

That's helpful. Thank you.

Terrence A. Duffy -- Chairman and Chief Executive Officer

Thank you.

John W. Pietrowicz -- Chief Financial Officer

Thanks, Lau.

Operator

And next move to Ari Ghosh with Credit Suisse.

Ari Ghosh -- Credit Suisse -- Analyst

Hey, good morning, everyone. And apologies if you've already hit on this, but just wanted to touch on a couple of items that could be incremental to volumes looking forward. So first, just hoping if you could give us an update on conversations you're having with clients around navigating UMR and potential cost saves from your FX suite? And then just moving on to bitcoin, you continue to see solid volumes and new account growth around bitcoin as well. So just curious how the institutional ecosystem here is evolving around bitcoin, and your competitive positioning in this emerging asset class as well. Thank you very much.

Terrence A. Duffy -- Chairman and Chief Executive Officer

Thank you. Sean?

Sean Tully -- Senior Managing Director and Global Head of Financial and OTC Products

Yeah. So in terms of the uncleared margin rules, that's something we've been very focused on now for a number of years and that will continue to be a tailwind for us in the next couple of years with the extension of the dates by regulators related to compliance. So we do expect that September of this year another very large portion of clients will be forced into those uncleared marginal. Relative to that, we do see an opportunity to offer clients listed FX options in particular, but also use our FX futures as alternatives to forwards.

We added as you'll recall, couple of years ago now, monthly futures in addition to our quarterly futures in order to help facilitate that as well as FX link in order to make that transition from the OTC market over the futures market to listed market much easier. As you're rightly pointing out, something that we point out, we pointed out for years now, right, is that if you are affected by the uncleared margin rules, you have a 10-day margin period of risk. If you move to an OTC product, and we do now clear both non-deliverable forwards as well as cash-settled forwards, those are G7 currencies, so we are clearing FX forwards, cash-settled FX forwards in the OTC market as well.

So uncleared 10-day margin period of risk, cleared OTC five day margin period of risk. It's actually now cleared about $69 billion worth of NDF and CSF in our OTC FX business relatively small, but increasing. But the most efficient place is in futures and listed options, which include one-day margin period of risk. So we do see that to be a continuing tailwind. In addition to that, our optimization services are very focused on having a holistic solution that no other marketplace can offer in terms of optimization of portfolios as well. So in terms of UMR, we can see continued benefit there. And I think you had a second question? Bitcoin.

Ari Ghosh -- Credit Suisse -- Analyst

Bitcoin.

Sean Tully -- Senior Managing Director and Global Head of Financial and OTC Products

It continues to operate well. We're doing around 10,000 contracts a day. And yeah, we did launch options on bitcoin which are doing well, but honestly, it's a very small part of our market.

Ari Ghosh -- Credit Suisse -- Analyst

Great. Thank you very much.

Operator

[Operator Instructions] And next we'll take a follow-up question from Brian Bedell with Deutsche Bank.

Brian Bedell -- Deutsche Bank -- Analyst

Great. Thanks very much. Just wanted to extend my appreciation for Bryan Durkin's help over the years, and your great answers on these earnings calls. And many other questions were asked already, but just, are there any plans to fill the President role or are you eliminating that position?

Terrence A. Duffy -- Chairman and Chief Executive Officer

Hey, Brian, it's Terry Duffy. I'm going to look at that over a period of time. Bryan is committed to being here through May and then help advising me thereafter. So, and he is also joining our Board of Directors, which will also be a benefit to the, not only the shareholders, but to the employee base as well which he is a big part of now. So I haven't made a decision about how we're -- I'm going to move forward with that particular role right now. I'll work with Bryan and others as we continue to evolve. And Bryan starts his transition into his next life. So let me instead echo your comments at the beginning, he does give great answers and not only that he works wonderful with clients, and his knowledge will be around for a long time to come. So that is greatly appreciated.

Brian Bedell -- Deutsche Bank -- Analyst

Okay. Great. Thanks very much.

Terrence A. Duffy -- Chairman and Chief Executive Officer

Thank you.

Operator

[Operator Instructions] And next we'll move to Patrick O'Shaughnessy with Raymond James.

David Farnum -- Raymond James -- Analyst

Hey, guys, it's actually David Farnum on for Patrick. I was wondering for the international business, I was wondering if you could dig into the drivers of your growth across the various regions. So, can you speak to your sales headcount ramp over the last few years? Where are we kind of right now across the various regions? Where was it say five years ago? And as we look forward, would you anticipate further head count growth to continue to capitalize on the international opportunity or do you feel like you're at the correct point right now?

Terrence A. Duffy -- Chairman and Chief Executive Officer

Good morning, David. It's Terry Duffy. Right now our head count in sales has gone up close to 200 of the CME workforce today and it's spread throughout the world fairly evenly. Obviously, the big part of it is here in the US, but in Europe and Asia as well and other parts. Listen, if in fact the business is growing and I continue to see the benefits, which I have seen, by increasing the sales force over the last several years. And I remember about 7 to 10 years ago that number was probably about 10 to 15 people on sales and now we're sitting at 200.

And you can look at the chart up into the right at the growth of the business and you can correlate that the new account acquisitions that Julie Winkler and our team have been doing along with the sales folks. And as long as we can continue to offer a solution that's more cost benefit to the participant. We're going to continue to add our sales folks to do so. It's one of those things, you don't want to have the company full of sales people, but if they are continuing to deliver value, I have no problem increasing the size of that staff as long as the business is reflective of what they're producing.

David Farnum -- Raymond James -- Analyst

Right. Very helpful. Thanks.

Terrence A. Duffy -- Chairman and Chief Executive Officer

Thank you.

John W. Pietrowicz -- Chief Financial Officer

Thanks.

Operator

And that will conclude today's question-and-answer session. I would now like to turn the call back over to the management for any additional or closing remarks.

Terrence A. Duffy -- Chairman and Chief Executive Officer

Yeah. We appreciate it very much, and we look forward to speaking with all of you next quarter. Have a nice day. Thank you.

Operator

[Operator Closing Remarks]

Duration: 56 minutes

Call participants:

John Peschier -- Managing Director of Investor Relations

Terrence A. Duffy -- Chairman and Chief Executive Officer

John W. Pietrowicz -- Chief Financial Officer

Bryan T. Durkin -- President

Sean Tully -- Senior Managing Director and Global Head of Financial and OTC Products

Derek Sammann -- Senior Managing Director and Global Head of Commodities & Options Products

Rich Repetto -- Piper Sandler -- Analyst

Dan Fannon -- Jefferies -- Analyst

Brian Bedell -- Deutsche Bank -- Analyst

Mike Carrier -- Bank of America Merrill Lynch -- Analyst

Sheriq Sumar -- Goldman Sachs -- Analyst

Alex Kramm -- UBS -- Analyst

Chris Harris -- Wells Fargo -- Analyst

Kyle Voigt -- KBW -- Analyst

Owen Lau -- Oppenheimer -- Analyst

Ari Ghosh -- Credit Suisse -- Analyst

David Farnum -- Raymond James -- Analyst

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